GSA market continues to evolve
The GSA market has evolved in a big way today. Gone are the days when a GSA was just a marketing arm of the airline. “The role of the GSA continues to evolve as carriers look to reduce costs by outsourcing more functions, and the traditional activities, such as cargo sales is not the only consideration in many GSA agreements. Data capture, accounting, publicity and promotion, managing ground handling and surface distribution are now normal functions, provided by GSA companies,” says Andy King, sales director, ANA Group. With 25 years of experience in delivering cargo solutions ANA Group is one of the world's leading suppliers of Cargo Management and GSSA Services from its head office at London-Gatwick. Airlines are getting more demanding when appointing a GSA especially in the current air cargo market where high costs are an issue. “Indeed, as most carriers are now looking to GSA applicants to provide performance guarantees, backed up financially, and at the same time commission rates are under downwards pressure,” says King. Airlines are expecting better services, more detailed market knowledge and more innovation from their GSSA as well as being financially robust. “GSA’s should focus on getting closer relationships with key agents and offer an extensive network with the ability to maximise sales actions. GSAs have to be financially strong and this often includes for bank guarantees. GSAs should offer innovative services on new business routes,” explains Adrien Thominet, chief commercial officer, ECS Group. ECS Group offers airlines a comprehensive GSA service which encompasses all aspects of their cargo capacity management. It enables them to maximise their cargo capacity and sales yield, while reducing their costs. “Airlines seek for more dedication from their GSA, which is quite logical due to increasing competition in key markets.” There have been an increasing number of developments taking place in the GSA market today. ATC Aviation Services recently spread its wings over South America. With AWT – one of the leading passenger GSSAs in South America – ATC is spreading its brand in Brazil, Argentina and Ecuador. But for GSAs to remain competitive, strong IT compliance is important to attain sanguinity in the air cargo supply chain. SITA’s Cargospot GSA is one such system that integrates the processing of all cargo management activities. It also expedites adjustments to operational requirements, market situations and procedural changes integrating easily with existing or new third-party systems. As the multinational GSA companies are entering more emerging markets, there are often regional issues. For some, it’s easier to do business in established markets than in the emerging ones. “The ANA Group operates in five continents with offices in established and emerging markets, there are different challenges operating in emerging markets but the primary function is the same – source air cargo business,” says King. GSA CARGO ECS offers airlines a comprehensive GSA service which encompasses all aspects of their cargo capacity management. It enables them to maximise their cargo capacity and sales yield, while reducing their costs. However, Thominet believes that there are challenges and opportunities in emerging markets. “We have strong presence in established markets, better access to market info and existing and close relations with customers, but the emerging markets have high potential for growth. These new markets require new tools, solutions and flexibility by the GSAs which are in the DNA of ECS Group,” he says. ECS Group has developed its network in Africa and built strong relationships in Niger. Since 2012, ECS Group invested in Niger Air Cargo. Last year the global GSSA, Air Logistics Group, expanded its network in Africa with the opening of a new office located in Senegal. The office, which is the fourth Air Logistics Group office in Africa, was launched on the 1st November 2013. Air Logistics Senegal represents Delta Air Lines who operate twice weekly B757 services from Dakar direct to New York. The opening of the office in Dakar followed an earlier launch of an office in Mozambique. The office located in Maputo was launched on the 1st October 2013 and represents Qatar Airways who operate 3x weekly B777 services from Maputo. “Our new offices in Dakar and Maputo are the latest additions to our expanding network across Africa where we are building a recognised presence,” commented Jeremy Henno, Regional Director Africa. “As trade between Africa and Asia continues to develop rapidly, and international investment in Africa continues, we are confident these new offices will be a success.” Between the GSA and the airline, a common link is the forwarder. But that relationship is also changing, as often was case where the forwarder would prefer to interact with the airline instead. “Yes, freight forwarders mainly understood the benefit to execute some of their traffic through one sale umbrella and in addition our strong market presence gives them a wider interface,” confirms Thominet. “More carriers operate preferred agent agreements and incentivise global key customers, and carriers hold such negotiations directly with these forwarders,” says King. Coming forward, there are various market trends shaping the GSA business today. “The excess of cargo capacity in many of the major markets continues to force rates downwards and margins for the GSA become less as carriers cut costs. This is resulting in a consolidation of GSA companies, either by acquisition or cooperative agreements and I believe this trend will continue,” says King. For ECS Group, currently, there are actually a lot of opportunities, through different collaborative models in markets like India, USA, Southeast Asia and Latin America.